While technology drives credit union growth, garnering the resources to acquire and implement technology remains among the biggest challenges for small credit unions.
“Lack of resources is our biggest challenge,” says Jay Lee, vice president of information technology (IT) for three small credit unions in California: $76 million asset CalCom Federal Credit Union in Long Beach, $28 million asset Mattel Federal Credit Union in El Segundo, and $82 million asset Nikkei Credit Union in Gardena.
“Small credit unions don’t operate like big IT companies and we don’t have the big budgets like IT companies, so everything we get is pretty much out of the box,” he says.
Deborah Fears, president/CEO at $26 million asset Chicago Post Office Employees Credit Union, says even out of the box technology takes time to implement.
“With any new technology, especially from a services standpoint, it's going to take energy from a resource perspective,” she says. “You have to research and review, compare and project manage, and train. For a small credit union with limited resources, that can be challenging to manage, so you have to pick and choose what gets implemented and determine if it’s necessary.”
Sometimes necessity is the mother of invention. Lee recalls an instance where his team cobbled together some script in Excel to overcome ATM settlement problems within its core system.
“We work with what we have and we don’t overthink things,” Lee says.
One of the keys to keeping pace with technology is being proactive, says Eric Bruen, president/CEO of $56 million asset Desert Valleys Federal Credit Union in Ridgecrest, Calif. “If you stay up to speed from the beginning, you don’t fall down that vicious spiral of playing catch up year after year.”
As an example, he cites Desert Valleys Federal’s use-and-donate policy for its desktop and laptop computers under which it donates PCs to a local nonprofit organization every three years.
“The depreciation period is normally about three years or $500 on any basic laptop, or $1,000 on a desktop,” Bruen says. “If we don't do that consistently, we end up with accumulated data, much of it garbage, inside the computer over time. It also forces our people to keep their documents in the cloud, use the services that are available, and do what we ask them to do from a technology perspective.”
‘If you stay up to speed from the beginning, you don’t fall down that vicious spiral of playing catch up year after year.’
Fears says strategic planning provides a long-term perspective. “We typically put together a three- to five-year IT plan so we know what's coming down the pipeline,” she says. “For instance, if we know our phone system is going to reach its end of life in the next three years, we can start to budget for that.”
Fears also works with a “fantastic” IT consultant. “He works with us to make sure we are staying compliant and on top of things, and thinking ahead strategically,” she says.
Fears has a technology “wish list” each year, but that gets pared down about 80% in the typical year. During pandemic-stricken 2020, when self-service technology became a priority, Chicago Post Office Employees implemented services such as a new mobile banking app, remote deposit, and electronic signatures.
“We had to make a few budgetary adjustments to make this happen,” she says. “We were able to shift certain priorities and reallocate funds from projects that could be moved or put on hold. It was all about being able to pivot.”
Fears says its paramount to keep tabs on member expectations.
“Why wonder when you can ask,” she says. “We survey members to get their feedback. We know the answer to our questions.”
One way to ease technology’s resource burden is through collaboration. Lee credits the Southern California Credit Union Alliance for being a valuable forum for best practices and collaborative problem solving among small credit unions.
“Even if we’re not experiencing a problem, we can offer guidance,” Lee says.
Another credit union collaboration vehicle, the credit union service organization (CUSO), has eased the technology burden at $57 million asset Cutting Edge Credit Union in Milwaukie, Ore., says CEO Brady Howe.
From its core processing through its products and services, Cutting Edge meets its technology needs through its affiliation with Member Driven Technologies (MDT), a CUSO that allows credit unions to share IT costs.
“They even take care of security for us, which is such a big worry today,” says Howe. “Economies of scale created through the CUSO allow us to offer more products and services.”
Just as important, cost savings have allowed Cutting Edge to grow.
“We doubled in size since we went with MDT,” Howe says. “We’ve hired more staff, including an IT person. Previously, I was taking care of everything technology-related, which at a small credit union is common. Now that we’ve added staff, it’s off my shoulders and it’s much easier to prioritize.”